Strategic expansion needed in China’s dairy sector: How to embrace new markets and consumer needs

China's dairy companies need to adapt to changing market conditions to find new growth opportunities. While Chinese dairy consumption tripled over the past two decades, the CAGR is expected to slow to around 2% in the coming decade due to weaker economic growth, a declining birth rate, and an aging population.

Those significant demographic trends will impact dairy consumption patterns. Dairy companies must therefore take them into account when developing their product portfolios and should explore opportunities in new or adjacent markets.

Reliance on traditional revenue-generating categories like infant milk formula and liquid milk is no longer sustainable. China's dairy processing platform must evolve to focus on value-added processing rather than primary processing. Dairy companies must adjust their portfolios to maximize value and meet the growing demand for high-value dairy products and ingredients.

In this report, we outline the challenges and identify opportunities for dairy companies to grow existing core markets and expand into new or adjacent markets.